What is a Wholesaler in the Hotel Industry?

Wholesalers (or Bedbanks) are companies that make annual contracts with hotels where they buy hotel rooms in bulk. The wholesaler then resells these rooms to third parties such as travel agencies, airlines, or booking sites that the hotel does not have a contract with. A wholesaler only works business-to-business; this means that they will never sell rooms directly to guests. How do hotel wholesalers work and whats in it for hoteliers?

 

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How do wholesalers add value? 

Wholesalers are specialised resellers with many connections, which is why they have access to channels that hoteliers often cannot access directly. Another advantage is that it gives revenue certainty; the hotel rooms are already sold. Its up to the wholesalers to sell the rooms that they purchased. If you want to put less effort into the online distribution strategy of your hotel, it can be interesting to start working with these parties. 
 

How does a hotel wholesaler work? 

When a wholesaler contracts a hotel, both parties agree on how many rooms the wholesaler buys at what Net Rate*. Before the dawn of the internet, the rooms were then sold to travel agencies. Nowadays, wholesalers mainly resell rooms to online booking sites or other wholesalers. The wholesaler earns money by increasing the room price by an x percentage. 

*The Net Rate of a hotel room without the additional commission rate of the selling party (wholesaler, OTA, etc.). 
 

Should I work with a wholesaler? 

Wholesalers had to deal with some controversy in the most recent years, and that has partly to do with the price transparency on metasearch websites (e.g. Trivago). In a 2018 report by EyeForTravel, it became clear that non-contracted sales channels are undermining the hotel (and its contracted booking sites). Over 39% of bookings went to booking sites with which the hotel does not have a direct contract. This situation means that, in a sense, the hotel is paying the wholesaler to compete directly with the hotel itself. If you are considering working with a wholesaler, take a careful look at the nature of the business (identify reliable parties) and their contractual terms and conditions. 

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About SmartHOTEL

For more than 16 years, SmartHOTEL has been helping hoteliers navigate the exciting world of online distribution. From our office based in the Netherlands, our team serves independent hotels, hostels and chains worldwide by providing channel management and tailored online distribution solutions. A lot has changed over the last years, but our goal remains the same: simply connect hotels to the world. For any questions regarding our services, please contact us at sales@smarthotel.nl or call +31 (0)182 75 11 18.

By SmartHOTEL | October 06, 2014

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